UP FRONT, 4-3-08  Reading for next time: 399-403 (introduction to “valuing the environment”) and 411-420 (travel cost method of valuing a park or other attraction) o “MCS” stands for Marshallian consumer surplus. o “V i ” is visits from the ith origin or zone. In some models, each individual has his or her own origin. o For reading 411-420, note also the other symbol definitions on page 411.  Tonight 7:30, Goldwin Smith 142, “What Would Jesus Buy?” Outline for Today 1) Pollution fee vs. pollution reduction subsidy, continued

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Pollution fee vs pollution reduction subsidy In the short run Let ê be a fixed quantity of emissions greater than what the firm would choose with no subsidy. Firm receives s(ê-e) : Same result with subsidy as with tax?

Pollution fee vs. pollution reduction subsidy In the long run Suppose : 1. emissions e i are proportional to goods output y i . 2.

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